Bank of England upgrades economic growth forecasts

michaels

So over the last 4 years Graham are you saying you would have preferred to see lower inflation and even less 'growth' because that would have been more intellectually honest?

Are you also saying that if we see an increase in external costs such as an increase in fuel prices it would be better for monetary policy to be adjusted to keep overall price increases at the target level even if this sharply reduced economic output rather than accept price increases slightly (and it is slightly in a historical context where inflation rates in the 20s% are not unknown) above a somehwat arbitary target?

I get the impression that you are really concerned about falling real living standards and for some reason beleive that if inflation had been capped this would not have happened anyway under the much more painful route of falling nominal wages. I fear you would have been disapponted and that lower inflation would have led to a sharper fall in real GDP. Sorry

wotsthat

Graham_Devon wrote: »

Oh come on now.

I know you like your low insterest rates and I know you hate anyone who has been right over inflation over the last few years, but this nonsense is taking the cream cracker.

The point, which you appear to be blissfully missing isn't that inflation is at 3% or whatever it may be.

It's the consistently wrong, consistently optimistic forecasts the BOE have put out since around 2009.

It's the insistance year after year that "it's ok, inflation will fall in the next 12 months". It never happens.

It's the insistance that printing money didn't increase inflation, only for the BOE to admit quietly later in a report that it did (No !!!!!!...really?! Printing money puts pressure on inflation?!)

It's the insitance from the BOE (and plenty of posters on here, including yourself) that it was only the VAT increase...inflation will fall when that falls out only for nothing to happen when VAT falls out.

It's not at all about where inflation is today or where it's been over the last 20 years. You have called anyone who doesn't agree with you a frother, but it seems you don't even get what everyone else is even talking about.

To be consistently wrong for so long, while basing our monetry policy, spending reviews etc all on this data is pretty dire.

It wouldn't be so bad if they were genuinely wrong, but they weren't. It was all a facade to make things look ok in order to carry on.

You lose the argument when you have to keep falling back to childish slurs on anyone who argues against what you say.

Unless you're about 19 then 2.8% inflation looks low by any historical norm. This is the trouble with consistent low inflation - some people start to think it's the new normal - it's more likely policy related.

You honestly think Merv has the skills to purposely manipulate inflation to be 1% above target for 5 years for reasons unknown?

Conrad

Some time back I considered doing a thread entitled 'What's the betting hawkish King will want to leave on a high'.

I just had a feeling he'd be desperate to pass on the chalice on an upward slope rather than his usual gloom spreading style. IMO old Eddie George would have had a positive effect on sentiment, and that alone is worth something. King was always far too gloomy even way back in the early 2000's.

ILW

wotsthat wrote: »

Unless you're about 19 then 2.8% inflation looks low by any historical norm. This is the trouble with consistent low inflation - some people start to think it's the new normal - it's more likely policy related.

You honestly think Merv has the skills to purposely manipulate inflation to be 1% above target for 5 years for reasons unknown?

I believe that inflation running at around 6 x base is pretty unusual.

Moral hazard anyone?

michaels

ILW wrote: »

I believe that inflation running at around 6 x base is pretty unusual.

Moral hazard anyone?

Whereas I believe that calculating proportions of percentage changes is mathematically unusual and best left to journos who have no mathematical / statistical background...

Graham_Devon

michaels wrote: »

So over the last 4 years Graham are you saying you would have preferred to see lower inflation and even less 'growth' because that would have been more intellectually honest?

Come on Michaels. You know me better than that.

If that's what I was saying, I'd say it, and you wouldn't need to ask "are you saying".

Inflation is running far higher than base rates are, over any period in history that I can think of.

I don't mind it being where it is per se. I just don't like the excuses that it will come down therefore it's all ok.

All this "are you saying" and "you think this and that" simply avoids what I AM saying. It just means people can spin what I have said into something they can disagree with.

Wotsthat has done it in response. I never said what Merv could or couldn't do. My gripe was with their forecasts which even we on here could say wouldn't be anywhere close. We were right. That's not me saying "horrah, well done us" it's me taking issue with the silly forecasts.

ILW

michaels wrote: »

So over the last 4 years Graham are you saying you would have preferred to see lower inflation and even less 'growth' because that would have been more intellectually honest?

Are you also saying that if we see an increase in external costs such as an increase in fuel prices it would be better for monetary policy to be adjusted to keep overall price increases at the target level even if this sharply reduced economic output rather than accept price increases slightly (and it is slightly in a historical context where inflation rates in the 20s% are not unknown) above a somehwat arbitary target?

I get the impression that you are really concerned about falling real living standards and for some reason beleive that if inflation had been capped this would not have happened anyway under the much more painful route of falling nominal wages. I fear you would have been disapponted and that lower inflation would have led to a sharper fall in real GDP. Sorry

Why would lower inflation HAVE to have lead to lower GDP? You seen to take this as fact with no substantiation as to why.

A clever person would have increased GDP whilst also keeping inflation on target, thereby maintaining living standards of workers as opposed to those on inflation linked benefits.

Conrad

ILW wrote: »

A clever person would have increased GDP whilst also keeping inflation on target, thereby maintaining living standards of workers as opposed to those on inflation linked benefits.

This clever person would presumably have used higher interest rates to tackle inflation and thus made millions of people, including renters who's rent level correalates with B2L mortgage rates, hundreds of pounds per month worse off.

I have to pay a mortgage, so it is a much more critical element of my outgoings, whereas to one degree or another I have choices over my other expenses and feel better able to manage the inflationary dent rather than a 100% forced big dent bought on by higher interest rates.

Lesser of two evils is to have higher inflation with low interest rates.

EDIT - savers are secondary as they have options other than sticking it in a low yielding cash account.

ILW

Conrad wrote: »

This clever person would presumably have used higher interest rates to tackle inflation and thus made millions of people, including renters who's rent level correalates with B2L mortgage rates, hundreds of pounds per month worse off.

I have to pay a mortgage, so it is a much more critical element of my outgoings, whereas to one degree or another I have choices over my other expenses and feel better able to manage the inflationary dent rather than a 100% forced big dent bought on by higher interest rates.

Lesser of two evils is to have higher inflation with low interest rates.

I thought demand and supply set rent levels, otherwise rents would have plummeted since 2008.
As far as I know less than 50% of the population have mortgages.

Graham_Devon

Conrad wrote: »

This clever person would presumably have used higher interest rates to tackle inflation and thus made millions of people, including renters who's rent level correalates with B2L mortgage rates, hundreds of pounds per month worse off.

So how does this work?

Mortgages rates for BTLs fall, yet renters don't see a fall in their payments.

Mortgage rates for BTLs rise back up slightly again, and renters find themselves having to pay more, to the tune of "hundreds of pounds per month".

Please explain.